VA (Veteran’s Affairs) Loan
A VA loan is a type of loan that is promised by the U.S. Department of Veterans Affairs. This type of loan was created to provide a long-term assistance to qualified American veterans as well as their spouses (given that they do not remarry). The VA loan program is basically for veterans who are looking to purchase a home with some help, as well as no down payment. The VA program decides what areas will qualify for this loan. These areas may include: rural areas, small cities, as well as towns that are away from urban areas and large cities. This program also allows veterans up to 100 % financing without any mortgage insurance, or a second mortgage. They will also allow include 3.3% of the funding fee (if applicable). If the U.S. Veteran should be disabled, he or she may receive a minimum of 10% disability compensation based on their prior income. Also, if later on it should be discovered that the disabled veteran has already paid the funding fee, he or she may apply for a refund. If for any reason a veteran should not qualify for the financing of this fee, it is to be paid directly to the VA program. VA loans may not cover fees such as: appraisals, credit report, loan processing fee, search of titles, title insurance, hazard insurance, and some others. This loan can also grant a borrower up to six thousand dollars towards energy proficient repairs. VA loan amounts with no down payment can reach a maximum of $417,000. However, this maximum loan may vary depending on the county the borrower lives in. Some requirements that may influence the amount of the loan funded are: length of service, status of duty, as well as quality of service. The length of service for a vet can be any of the following terms: 90 days of active service in a war, 181 days of normal active duty, or more than 6 years of service in the Reserves. Veterans must also have a minimum credit score of 620, being that this is the requirement of the majority of lending companies. The borrower will also need proof of the following paperwork: copies of W2 statements for at least 2 years prior of seeking the loan, copies of the last 2 pay stubs received, documentation of other possible funding resources, as well as their Certificate of Guarantee. If the borrower is self-employed, they will need to provide at least 2 years of tax returns. Some examples of income sources that can be considered when applying for a VA loan are the following: retirement pension, social security, child support, as well as disability income. The best source of income to have when interested in a VA loan is a stable income that is from an employers. A VA loan is also able to be refinanced. If a veteran should want to refinance their loan, they would still be allowed up to 100% of the original loan amount. There are two different programs that can be used to refinance the loan. The first program is called a VA Streamline (IRRRL) Refinance. This program is great for borrowers who are looking to refinance with a lower mortgage rate. Some other advantages include refinancing without an appraisal, or needing to show proof of Certificate of Eligibility, as well as minimal or no out-of-pocket costs. The second program is called Cash-out Refinance. This program also allows borrowers to refinance at a lower rate, while using money from the home’s equity. It also replaces the borrower’s existing mortgage. Besides these advantages, military homeowners can use the money earned from the refinance towards home improvements, as well as pay off any debts.